But prospects this year are bleak given the current global economic slump, he said.

"We are not very bullish," Muhyiddin told a news conference.

The government may announce increased spending, cut power tariffs and further liberalize non-financial services sectors to boost economic growth and cut the costs of doing business to woo investors, he said.

"The government is in the midst of considering a second economic stimulus package to further boost the economy, in addition to looking at the reduction of power tariffs," he said.

The government said in November it would inject 7 billion ringgit ($2 billion) into the economy this year after slashing its growth forecast to 3.5 percent, from 5 percent last year. Some analysts warned the country may slip into a recession.

Muhyiddin said total approved investments in the manufacturing sector rose by 5 percent to a record 62.8 billion ringgit ($18 billion) last year, more than double the official annual target of 27.5 billion ringgit ($7.8 billion).

The increase in manufacturing investment was mainly due to 12 projects worth more than 1 billion ringgit each and which jointly accounted for 61 percent of total investments, he said.

Australia was the largest source of foreign manufacturing investments with 13.1 billion ringgit ($3.75 billion) last year, followed by U.S., Japan and Germany.

However, he said approved foreign investment in services fell by nearly half last year to 5.5 billion ringgit.

Muhyiddin said the global financial crisis and recession in the U.S., one of Malaysia's key trading partner, will create tough challenges for Malaysia to sustain its foreign investment inflows.

The World Bank has estimated foreign investment flows into developing countries to shrink 31 percent on-year to $400 billion in 2009, he said.

The ministry would increase its trade mission overseas and work together with the private sector to ensure a competitive operating environment, he added.